Pound Extends Decline Versus Dollar After Worst Drop Since 2010

Lmfx, Posted on February 24, 2016

The U.K. currency’s slide on Monday took it to the lowest level in almost seven years after London Mayor Boris Johnson, one of the nation’s most popular politicians, said he’ll campaign for Britain to leave the European Union in a June referendum.

Sterling’s 1.8 percent plunge was its biggest since May 6, 2010, when the currency was also hit by political turmoil, on that occasion resulting from an inconclusive general election.

The pound “has underperformed ahead of U.K. political events in the past,” Commonwealth Bank of Australia strategists, including Peter Dragicevich, wrote in a note. “The upcoming referendum will be no different.”

With traders having pushed back bets on the timing of a Bank of England interest-rate increase, the prospect of Britain leaving the world’s largest single market had been causing further concern, helping push down the pound against all of its Group-of-10 peers this year.

BOE Governor Mark Carney is due to testify to lawmakers about the outlook for the U.K. economy and monetary policy on Tuesday.

The pound slid 0.3 percent to $1.4108 as of 8:08 a.m. London time. The currency fell to $1.4058 on Monday, the lowest since March 2009.